US auto industry exuberant heading into 2013

FILE - In this Monday, Jan. 14, 2013, file photo, the 2014 Chevrolet Corvette Stingray is revealed at media previews for the North American International Auto Show in Detroit. Maybe it was the brand new, bright red Chevrolet Corvette gleaming in one corner, or the elegant BMW coupe in the other, but car companies were positively giddy this week as the North American International Auto Show opened in Detroit. U.S. new car and truck sales reached a five-year high of 14.5 million in 2012, and many executives and analysts think they'll climb to 15.5 million this year. (AP Photo/Paul Sancya, file)
— AP

FILE - In this Monday, Jan. 14, 2013, file photo, the 2014 Chevrolet Corvette Stingray is revealed at media previews for the North American International Auto Show in Detroit. Maybe it was the brand new, bright red Chevrolet Corvette gleaming in one corner, or the elegant BMW coupe in the other, but car companies were positively giddy this week as the North American International Auto Show opened in Detroit. U.S. new car and truck sales reached a five-year high of 14.5 million in 2012, and many executives and analysts think they'll climb to 15.5 million this year. (AP Photo/Paul Sancya, file)
/ AP

The unveiling of the BMW 320i sedan, an entry-level 3-Series that starts at $33,445, renewed questions about whether luxury cars are starting to bump into mainstream models.

In the last couple of years, mass-market brands have started offering features once reserved for luxury brands. Ford offers a hands-free, automatic parallel parking systems and lane-departure warning signals on the midsize Fusion. Even the little Dodge Dart has a heated steering wheel.

Buyers will have to decide: Do they buy a loaded Fusion for nearly $37,000 or the new 320i?

And carmakers need to decide how to market their cars. The Chrysler 300, for example, competes with other mainstream large cars at the low end, but it has two high-end versions - the 300c and 300 Luxury Series - that compete with BMW.

"It's really like having two cars," said Olivier Francois, Chrysler's marketing chief. "What we probably need to do is amplify the gap, separate the two poles."

Jim Lentz, who runs Toyota's operations in the U.S., isn't worried. In his own lineup, he says, the Toyota Avalon and Lexus ES sedans are very similar, but few shoppers consider both. "A Lexus buyer is buying the prestige. They're buying the dealership experience," he said. Avalon, he said, is the "accountant's car," not showy but with nice features.

Chrysler's Bigland says he can't worry too much about the battle between mainstream and premium cars because there's such tough competition on other fronts.

"It's just a great example of how brutally competitive this industry is," said Bigland. "From the BMWs to the Mercedes to any of the other 18 manufacturers that we square off with every day. Every single one of them, if you don't come and play your `A' game, you're going to get your head kicked in."

Crossovers get smaller:

With explosive growth in crossover vehicles in the past five years, automakers are looking at new ways to attract buyers of more efficient SUVs that are based on car underpinnings.

At the Detroit show, Honda opened a new front in the battle with a sharp-looking small utility. It's based on a subcompact frame and will be smaller than Honda's popular CR-V. It's a new part of the market that's attractive to automakers because there aren't any well-established competitors to unseat.

Nissan already is in the market with its funky Juke. General Motors' Buick is just entering with an all-new Encore.

Honda Executive Vice President John Mendel says the new vehicle, called simply an "Urban SUV Concept," is designed for city commuters who still want the cargo space, adventurous lifestyle and high sitting position of an SUV.

It's aimed at people who no longer need a bigger SUV, yet don't want to give up the utility. Mendel says technology has allowed it to create more space in a smaller vehicle, matching the interior volume of older compact SUVs.

"If you've got a 5- or 7-year-old car, you can move down a class and not give up anything including space," he said.